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Chapter 7 Tourism Marketing
Learning Objectives
Describe the differences between the marketing of tourism
services and traditional product marketing.
Compare and contrast the different approaches to marketing
associated with production, selling, marketing, and societal
marketing orientations.
Explain the concept of market segmentation and how target
markets are selected.
Define positioning and explain how it is used in tourism.
Explain the product life cycle concept and how it applies to
tourism.
Describe each of the steps of the marketing planning
process in tourism.
List and describe the elements of the marketing mix.
Overview
Tourism marketing is unique;
Tourism marketing defined;
Marketing orientation;
Market segmentation;
Positioning;
Product life cycle;
Marketing planning process;
Tourism marketing is unique
Tourism is a combination of personal services and
certain physical facilities and products. An intangible
experience is offered.
Tourism is highly perishable commodity.
Tourism consumption and production take place at
same time. Tourism supply can’t be stored.
Tourism is a mixture of several services and some
facilities and products.
Package - Interdependence
DMOs have little control over the qualities and
quantities, and must rely on the other tourism
organizations.
Not easy to provide consistent quality of service.
Tourism demand is highly elastic, seasonal in nature.
Definitions of Tourism
Marketing
The French School / Robert Lanquard
Swiss School / Jost Krippendorf
The American School / J.J. Swarchz
The American Marketing
Association/AMA
A popular definition in the United States
Definitions of Tourism
Marketing
French
School ( Robert Lanquard):
Is an attitude of permanent research
to satisfy the social- psychological
needs of the tourist, the host community
and tourism organizations (private and
public sectors).
Swiss School (Jost
Krippendorf):
Is
a systematic adoption of
policies by the public & private
sector at all levels for the
satisfaction of a pre-determined
group of consumers.
The American School / J.J.
Swartchz
Is the mix and in-depth research of
the four elements:
Product, Place, Promotion and
Price, to obtain the wanted sales
volume.
The American Marketing
Association
Is a planning process for the
execution of concepts and
strategies on the ‘4P’s to create
exchanges and satisfy the needs
of the clients, the destination or
the
organizations’ objectives.
Marketing
A popular definition in the United States
Is all the stuff you do to make money!
Marketing VS Sales
The objective of marketing is “to please and
serve the needs of the clients while making
business”
To sale is an attitude geared to success in the
fundamental objective to sale not matter
what!!
Tourism Marketing Definition
A
systematic process of planning,
researching,implementing,controlling
and evaluating the “10 Ps”as
components of the marketing mix.
Five
key functions of marketing
Marketing Orientation
– Tourism Marketing Historical Evolution
20’s >>>> USA
50’s to 60’s – Production Era
70’s to 80’s – Sales Era
80’s to 90’s – Marketing Era
2001… Societal & Sustainable Marketing
Marketing Orientation
– Tourism Marketing Historical Evolution
Production Era: The demand exceeded the
supply; the emphasis is placed on the services
and products.
Sales Era: The capacity met the demand; focus
on the need of the seller.
Marketing Era: The supply exceeded the
demand; focus on the needs and wants of the
visitors.
Societal Marketing Era:Destinations &
businesses / social responsibility
Marketing Orientation
– Societal and Sustainable Marketing
Recognizes the need for:
New products (designed with sustainable principles)
Fresh services
Customer’s satisfaction
Standards of quality
Sustainable practices
Social responsibility of business (examples)
Businesses as part of society
Market Segmentation
Is a process through which people
with similar needs, wants, and
characteristics are grouped together
so that a tourism organization can
use greater precision in serving and
communicating with these
It is a two step process:
market segments and target markets.
Reasons for Market
Segmentation
Not possible to serve the total market
Total market is not homogeneous
Customers react differently to 4 P’s
To properly identify target markets
To better position the product
To better serve the customer
To compete more effectively
To achieve organizational goals such as higher
profitability, effectiveness, service quality
Segment Marketing
Targeting a group of customers
who share a similar set of
needs and wants
Criteria for Marketing
Segmentation
Measurable: potential customer number can be
estimated
Substantial: sufficient numbers of visitors in a
segment
Accessible: can be reached and influenced
Defensible: characteristics different enough
Durable and Sustainable: maintain its uniqueness
Competitive
Homogeneous: similar enough in the same
segment
Compatible: between segments
Bases for Segmentation
What characteristics or bases should be
used to divide a tourism market into
segments?
The alternatives are numerous, including
the following 7 broad categories (for
some authors 8).
Categories or Types
of Segmentation
1. Geographic (location)
2. Demographics (age, sex)
3. Purpose of Trip (business, pleasure)
4. Psychographics (lifestyle)
5. Behavior (brand loyalty)
6. Product-Related (appeal to service)
7. Channels of Distribution (dividing travel
intermediaries)
8. Price (for some authors)
Four approaches to market
segmentation
Undifferentiated marketing (Assuming the
demand is homogeneous)
Differentiated marketing (could be really
different segments or different promotional
approaches)
Concentrated marketing (focus on a single
market or niche marketing)
Customized marketing(for each individual)
Positioning
Is
the development of a
service and marketing mix to
occupy a specific place in the
minds of customers within
target markets.
Reasons for Positioning
There are three main reasons for positioning:
1. Perceptual Processes
2. Intensified Competition
3. Volume of Commercial
Messages
Advantages of Positioning
Helps reduce vulnerability to external events
Reduces risk for the consumer at the point of
purchase by showing the expected quality
May attract other segments
Provides focus to all stakeholders (strong
brands benefit everyone)
Key to repositioning in case needed
The Five D’s for Effective
Positioning
1. Documenting: Identifying the benefits
important to customers who buy your type
of service.
2. Deciding: Deciding on the image that
you want customers to have within target
market
The Five D’s for Effective
Positioning
3. Differentiating: Pinpointing the competitors
you want to appear different from.
4. Designing: Providing product or service
differences and communicating these in
positioning statements and other aspects of the
marketing mix
5. Delivering: Making good on your promises!
Branding
“ A name, symbol, design or some
combination which identifies the “product”
of a particular organization as having
differential advantage”
Powerful corporate brands can override
weaker destination brands
Product Life Cycle
Sales and Profits Over the Product’s Life From Inception to
Demise
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Losses/
Investments ($)
Introduction
Growth
Maturity
Decline
New Product Development
Sales are zero
The company’s investment costs add up
Most expenditures
Financial losses
Introduction
Small variations
Distribution, technical problems
Difficult to sell
Slow sales growth as the product is being introduced
into the market
High promotional expenditures
Profits nonexistent due to high product introduction
expenses
Only a few competitors
Focus on sales to the higher income groups
High price to cover expenses
High production, marketing costs
At this stage – even many years
Introduction
Tasks:
Establish positive image
Develop customer loyalty
Gain good marketing intelligence
Increase market share
Develop primary demand
Strategy:
Expansion: increase annual growth, market share,
number of target markets
Growth
Rapid market acceptance
Increasing distribution
Spreading costs over the increasing number of outputs
Increasing sales and profits
Early adopters continue to buy
Developing customer trust and loyalty
Later buyers start following
Positive word-of-mouth
More competitors
Prices remain high
Higher promotional expenses
Growth
Tasks:
Maximize sales and profit
Create new 4 P’s
Promote uniqueness
Launch new brands
Cut prices
Strategy:
Penetration of a new market: redefine market segments,
find new markets, extend the existing markets,
Use positioning to the full, improve quality, modify
product, increase volume of the product
Maturity
The product has achieved acceptance by most of its potential
buyers
Distribution is maintained
Promotional expenses high
Greater competition
Market highly segmented
Product quality at the highest level
Sales growth slows down
Supply exceeds demand
Overcapacity
Price war
Increased advertising, sales promotion
Stealing customers
Hard sales
Profits level off or decline
Increased marketing outlays to defend the product against
competition
Maturity
Tasks:
Differentiate product
Differentiate packaging
Find new use, attributes
Stress price, discounts
Further segment the market/s
Take over the market share from competitors
Increase promotion
Maturity Strategies
Increase the use among present customers (e.g.
salads in McDonald)
Look for new market segments
Change the marketing mix for new segments (price,
better ads)
Change the product mix (length, width, depth)
Modify and, differentiate
Focus on durability, quality, peed, taste, style
Reposition
Maintain growth
Decline
Aging product
Sales fall off quickly (new products, new preferences,
advances in technology, increased competition)
Many replacements and substitutes
No incentives to buy
Decrease in demand
Increase in production costs
Profits drop
Decline
Tasks:
Increase productivity
Search for new products
Search for new opportunities
Review sales, profitability
Strategy:
Keep the markets
Develop new products
Maintain, harvest (reduce cost), terminate
Shopping malls and tourists
Product Deletion Process
(Martin Bell, Marketing Concepts and Strategy, 3rd ed., p.267, 1979, Houghton Mifflin Company; used by permission, Mrs..
Marcellette (Bell) Chapman. )
How to design a Marketing
Plan?
Marketing Plans
Meticulous study of
Political
Social
Economic
Demographics
Technological and
Physical Environments
Incorporates sustainable tourism principles
and practices
Marketing Plan
A written document containing description
and guidelines for an organization’s or
destination’s product’s marketing
strategies and programs for offering their
products and services over the defined
planning period, often a year.
Marketing planning process
Five Key Questions To Answer
1. Where are we now?
2. Where we will like to be?
3. How do we get there?
4. How do we make sure we get there?
5. How do we know if we got there?
Marketing planning process
1. Where are we now?
1.
Where are we now? / Situation or Market
Analysis
1.1. Customer Behavior
1.2. The Buying Process
1.3. Analysis (SWOT)
1.3.1 Market Environment A.
1.3.2 Community Analysis
1.3.3 Primary Competitor Analysis
1.3.4 Market Potential Analysis
Marketing planning process
2. Where would we like to be?
2. Where we will like to be? / Market
Research
2.1. Market Segmentation, Size and
Trends
2.2. Positioning
Service Analysis, Design &
Formulation
2.3. Market Strategies
Marketing planning process
3. How do we get there?
3.1. Marketing plan
3.1.1 Objectives, goals and
strategies, positioning
3.2. Programs and activities
3.2.1. Promotional Mix (select tools)
3.2.2. Advertising Campaign (media
selection)
3.3. Final Budget
Marketing planning process
4. How do we make sure we get there?
4. How do we make sure we get there?
— Control
Marketing planning process
5. How do we know we get there?
5. How do we know if we got there?
— Evaluation
The End!